Tuesday, October 16, 2012

Tuesday Morning Links

This and that for your Tuesday reading.

- Crawford Kilian talks to Ed Broadbent about the effect of increasing inequality and the prospect of changing course:

On how quickly things could turn around:

"I'd like to see a strategic plan. We can't
change overnight after 20 years. We could take a series of measures;
B.C., for example, has an affordable housing problem. The Trudeau
government brought in a mix of public and private measures for such
problems, but it took time. A hike in the minimum wage would help.
Currently the federal government sets its wages on provincial levels,
instead of setting its own levels. We also see the evidence of other
advanced countries: more equality means a more productive economy.
Germany, Sweden and Norway all have productivity levels equal to ours or
higher."

On the least understood aspect of inequality:

"Inequality is bad for everyone, including
the rich. Americans in the top three per cent have health outcomes worse
than those in Sweden and the Netherlands. Such negative effects on the
whole society aren't understood. With equality, everyone does better.
Also, a more equal society benefits middle-class Canadians -- stronger
pensions, lower crime rates, fewer teen pregnancies, and so on. The
evidence shows the U.S. is way down in social mobility. The poor in
equal societies have better chances than they do in the U.S."

- Meanwhile, David Fraser reports on Kirk Englot's work as to how Saskatchewan can reduce poverty - if we choose to make that a public policy priority.

- Toby Sanger notes that part of Dalton McGuinty's legacy will be the choice to hide savings from lower interest rates - with the apparent purpose of taking a larger bite out of Ontario workers than he could possibly justify if it were honest about the province's fiscal situation:

(T)he Ontario government will be able to save an additional $5 billion
from lower borrowing costs over the next five years as a result of lower
interest rates than they had forecasted in their 2012 budget. By a
surprising coincidence, these savings are almost identical to the
amounts that they can be expected to save from their wage freeze
legislation. (Perhaps that’s why these interest savings weren’t
acknowledged in their fall Statement.)

These savings are similar to what they expect to save from the two
year wage freeze on public sector workers imposed through their
Orwellian-sounding Protecting Public Services Act.

This means the Ontario government could reach its deficit targets
without imposing these public sector wage freezes, which will dampen
wage growth all around and slow down the economy, thereby reducing
revenue growth. Even the IMF recently warned governments not to
unnecessarily cut spending and impose austerity measures as this is
leading to slow economic growth.

- Finally, Sean Tucker and Andrew Stevens point out the inevitable end result if one accepts the Cons' spin as to why unions should be forced to make their membership matters the subject of public scrutiny:

Bill C-377, An Act to Amend the Income Tax Act (labour organizations),
if passed, would require unions to publically disclose an unprecedented
amount of financial and other information about their activities on the
Canadian Revenue Agency’s website. Not surprisingly C-377 is opposed by
organized labour who see it as principally anti-union. However, in the
face of such criticism, the bill’s sponsor has argued that “If there is
an ideology, it is based on the principle that organizations that
receive public benefits should be accountable to disclose how they use
those benefits.” According to Heibert, the primary public benefit
enjoyed by unions is that their members can deduct dues from their
personal income, thus depriving the public treasury of over $400 million
of dollars in lost revenue.

Mr. Heibert’s public benefit argument is problematic for several
reasons. Many businesses receive substantial direct and indirect
benefits through the Income Tax Act and other federal government
programs but disclose little or no information to the public. If
Hiebert’s chief motivation is to ensure the financial accountability of
organizations that benefit from taxpayer supported initiatives, why
restrict C-377 to trade unions? Why not extend this transparency model
to private businesses and professional associations? An MP inspired by
accountability, and not an anti-union animus, should settle for nothing
less.

Imagine a medium-sized engineering firm that receives any of the
following federal government benefits: $5,000 to subsidize the salaries
of post-secondary graduates under the federal Youth Employment Program,
$35,000 for eligible research and development activities under the
Scientific Research and Experimental Development (SR&ED) Tax
Incentive Program, or $50,000 under the Canadian Innovation
Commercialization Program. These are all part of the government’s
Economic Action Plan. The business equivalent of Heibert’s law would
require this firm to publicly disclose senior management salaries and all transactions over $5,000, with both the payer and payee being identified. But, the extent of accountability would reach even further under Hiebert’s bill.

Though C-377 references the level of financial transparency required
of registered charities as a model, the bill demands far more
information. For example, the government would define and require
reporting on over a dozen categories of business-related activities and
require senior managers to report on all political and lobbying
activities. The costs associated with reporting, of course, would be
borne by the business and non-compliance would result in a fine of
$1,000 per day. And, because the scope of disclosure mandated by C-377
is not proportional to the size of the public benefit, all businesses
would be treated equally. All of this would be taking place as business
associations are lobbying for fewer government regulations.